Park City-based Premier Resorts of Utah accepts bankruptcy in Salt Lake City court
May 29, 2009
The fight is over for Premier Resorts of Utah, formerly doing business in Park City as Deer Valley Lodging.
Late Wednesday night, the company decided to stop contesting the involuntary bankruptcy petition. Premier’s legal counsel Kenneth Cannon told Judge Judith Boulden on Thursday morning that they consented to Chapter 7 bankruptcy.
"We have resisted," Cannon told the court. "Last night we simply came to the conclusion that we cannot do that."
It is not clear what assets the company holds to be liquidated for payment to creditors. In a pre-trial conference between Cannon and Park City attorney Joe Tesch, Cannon estimated the amount owed to condominium owners to be about $5 million. The two only spoke of about $280,000 in assets.
The court proceeding consisted of two requests made by each side respectively, which the judge granted. The first was a lifting of the stay on the condominium owners and the lodges.
When an involuntary bankruptcy is requested, it is the creditors who are restricted while the debtor is allowed to continue business as usual. This meant that the company’s property management contracts with the lodges and the owners’ contracts for nightly rentals were frozen in place.
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Premier Resorts of Utah announced that it was acknowledging the cancellation of those contracts, except for clients who still owed the company money. Boulden accepted those terminations that had been requested by May 1, but said others would have to be examined in the order they were requested.
The second request, made by Premier Resorts and supported by Tesch, was an OK to release funds held for payroll. checks sent out Tuesday and Wednesday, he said. The motion allowed those checks to be cashed.
"This is about payment of who I call, ‘the little people’ living hand-to-mouth," Tesch told the judge.
The reason it needed court approval is because checks that were not cashed before the bankruptcy was declared would have been frozen as part of the proceedings.
The check amounts totaled $88,000 and ranged from $5 to $3,000. No officers of the company were included in that payroll, Cannon said.
He and company’s chief financial officer, Brad Goulding, said after the hearing that they weren’t sure if these checks fulfilled all of the unpaid employees terminated in May. Spokesman Bobby Foster said on Friday he thought they did.
The lifting of the stay means that lodges are now free to find new property managers and owners are free to find new companies to rent out their units to visitors.
"Some companies have already started on a volunteer basis," Tesch told the judge.
Urgency was important because reservations are being made now for the summer season, he explained.
A trustee has now been appointed to examine Premier Resorts of Utah’s situation and oversee its dissolution and repayment of all creditors.
Included in the list of creditors are the state and federal governments for unpaid transient room taxes estimated to be hundreds of thousands of dollars. The repayment of those taxes will take precedent over repayment of affected home owners.
Judge Boulden also made clear that the trustee has the right to potentially demand a return of the payroll monies cashed after Thursday morning if it is determined that another expense deserves priority.
Charles Herring, a home owner at Trail’s End, didn’t have much of a reaction to the news. He said via email on Friday that he’d already mentally written off the $20,000 or so he’s lost.
Former spokesman for Deer Valley Lodging, marketing director Thomas Cooke, accepted a job with another company in mid-April and said he’s been watching with disgust how his former colleagues have been treated during the last month.
He said it has been "mind boggling" watching the demise of the company this spring.
"A year ago, people in the business and in town knew I was going to work for Deer Valley Lodging, they acted like I won the lottery," he said. "It was a ‘blue chip’ Park City company."
Even though he doesn’t suffer the same pain as his friends still looking for new jobs, Cooke said he’s one of many wondering where the money went. If reservations were down 30 percent, income should have been down 30 percent. There shouldn’t be millions of dollars missing.
"People don’t accept it and want to know what happened here," he said.
He said he hopes all the affected lodges and owners come out all right, but questions the future success of Premier Resorts International.
He said he isn’t sure they can close their Park City operations and continue as normal in the rest of the country.
"The resort business is a pretty small community," he said. "That’s a little delusional."
Premier Resorts International spokesman Bobby Foster said Friday that the decision to accept bankruptcy was made because of the tremendous legal fees expected.
"The decision to proceed was to allow assets to move to creditors instead of paying lawyers and fees," he said.
Because each operation of Premier Resorts International is separate, the company’s endeavors in Hawaii, Mexico, Oregon, South Carolina and other locations will carry on business as usual, he said.
The company owns its headquarters at Deer Valley Plaza and will continue to operate from there. Foster said it was even possible the company might take advantage of future business opportunities in Utah.